■ Medium-term Management Plan 1. The goal of the medium-term management plan The outline of the "Medium-term Management Plan 2025" (fiscal year from February 2024 to February 2026) that Veru, Inc. is currently working on is as follows. The company believes that the market environment will change after the end of the corona pandemic. Regarding the changing societal situation, the company assumes various management challenges arising from the normalization of economic activities and the consequent labor market shortages, uncertain future risks, the rise of marketing needs due to the evolution of technology and the increasing complexity of customer touchpoints. As for the company's market, it predicts the importance of securing highly skilled personnel through marketing technology utilization and the increase in effective BPO demands in both the defensive and offensive areas amid various management challenges, as well as rising labor costs due to a shortage of human resources and the automation of customer correspondence. In April 2023, the company established a new corporate brand slogan, "How will you respond to that voice?". Although it has been listening to the needs of society, companies, and consumers by listening to the people's voices and solving problems with meticulous communication, the problems that can be solved by interpreting the "voice" are becoming more multifaceted and complex due to technological innovations. Meanwhile, the new epoch of "NEW BPO," which the company group aims to achieve as a slogan, is to model the process of turning many of the voices gathering at the CX site (customer response department) into values related to management decisions and to lead to the optimal action by utilizing data. NEW stands for Next, Engage, and Widen, aiming to delve into all the voices (maximizing the performance of 40,000 people, enhancing the utilization of data), connect stakeholders (collaboration with partners), and broaden the sphere of influence (growth strategy for expanding into new business domains). In other words, it is considered that the company aims to utilize a wide range of collaborations with companies more than in the past, not only in contact centers but also in marketing and other areas. In the "Medium-term Management Plan 2025," the company has set three key policies and plans to make additional investments of a total of over 15 billion yen for three years from fiscal year 2024 to achieve them. As a result, it has set quantitative targets to achieve sales revenue of 180 billion yen (an average year-on-year increase of 7.1%), operating profit of 16.5 billion yen (an operating margin of 9.2%), net income after tax of 11 billion yen (an average year-on-year increase of 11.8%), ROE of 14.4%, and a dividend payout ratio of 50% for the final fiscal year ending in February 2026. It is a goal-setting that exceeds the sales revenue average annual increase of 5.3% and the tax-exempted income average annual increase of 8.7% in the previous medium-term management plan, based on the assumption regarding the changing social and economic environment. Although the first year of the plan, the fiscal year ending in February 2024, started off tough due to the unexpected decrease in high-profit corona-related businesses, the company aims to achieve its target for the final year by investing in organic growth (growth by internal resources) and reform through generated AI after the fiscal year ending in February 2025.

Genie <6562> formulated a three-year medium-term management plan 'First Magic 2025 Towards 2030 Vision' in May 2023 (from the fiscal year ending March 2024 to the fiscal year ending March 2026). To achieve the company's purpose of 'Creating a world where everyone can succeed in marketing' domestically by 2030, three phases have been set. In this medium-term management plan positioned as 'Phase1,' efforts will be made to strengthen the domestic and international ad technology business to create a new growth trajectory.

The numerical targets include setting sales revenue for the fiscal year ending March 2026 at 162-202.2 billion yen (compared to the planned 102 billion yen for the fiscal year ending March 2025), gross profit at 132-164 billion yen (compared to 80 billion yen), operating profit at 45-55 billion yen (compared to 23 billion yen), and net income attributable to the parent company's owners at 30-37 billion yen (compared to 17 billion yen). However, these numerical targets will be reviewed in the future in a form that reflects the integration effects with Social Wire. In the review process, in addition to the integration effects with Social Wire, performance outlook based on Zelto's PMI progress and trends in the advertising market in the USA will be considered to formulate the plan.

As a general policy, in the SSP area, efforts will be made to expand the share of the video area, which has been untapped until now, and further improve performance by deepening and expanding transactions with companies in the enterprise field. In the DSP area, the policy is to expand the share in the enterprise field through the development of the recently released Retail Media Platform (RMP) and the cultivation of major advertising agencies. In the marketing SaaS business, efforts will be focused on cost-effective marketing measures to expand in the enterprise field, along with strengthening initiatives for large agency measures. As for new businesses, collaboration is expected in the marketing field with the newly established subsidiary JAPAN AI. In overseas business, the policy is to sell Zelto products through agents domestically and internationally, and to expand domestic and international resources globally.

Furthermore, as the management foundation to support this, the company aims to promote diversity through improving the ratio of female employees and foreign employees, achieve corporate business efficiency using ChatGPT, introduce productivity indicators to all businesses, establish a monitoring system based on KPI and OKR (Objectives and Key Results - a target management method that allows companies, groups, and individuals to set the same performance goals and work on the same key issues), and strengthen internal management systems towards a change to the Tokyo Stock Exchange Prime Market.

The company cites 'Management Management Field,' 'Technology Field,' and 'Business Field' as sources of its competitive advantage. In all these areas, the company continues to enhance its competitive advantage by actively recruiting personnel. Specifically, in the field of management management, it possesses talents in supporting business operations that leverage the assets and brands of multiple businesses, developmental capabilities of business management that contribute to the company's high growth, the nurturing of business management talent, and expertise in early integration of other organizations as its strengths. Therefore, the company actively recruits personnel at the officer level of listed companies. In the technology field, it seeks talent that can utilize advanced technologies like AI for businesses, and those with the ability to accurately grasp customer needs and implement them into systems. In the business field, it looks for talent with expertise as product managers who can develop cost-effective products to enhance customer value. While advancing proactive investments in each field, the company plans to control recruitment scale based on the achievement status of quarterly business plans in the future. Regarding personnel, in addition to external recruitment, the policy includes promoting exchanges among business units, which is also considered a measure that contributes to improving employee productivity.

(Writer: FISCO analyst Tomoichi Murase)